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Stimulus And The Tyranny Of ‘Practicality’
The House passed Joe Biden's $1.9 trillion virus relief bill early Saturday.
It was not a bipartisan affair. There was no Republican support and two Democrats voted against it. The final vote was 219 to 212.
The legislation, with which most Americans are by now at least vaguely acquainted, increases payments under a key federal unemployment supplement to $400 from $300 and extends them through the end of August. They were poised to expire midway through next month. The bill also increases the
If you print money to pay for things, that will generate inflation. When you generate inflation, that hurts the middle 75% of the population. It helps the bottom 20% for a moment as they get more money. It helps the top 5% who have assets that earn their way through inflation, and then which benefit from the decreasing burden of inflated debt.
But the folks who save in, are paid in, or who receive pension in dollars. Those people are being sold down the river. A TV set for you today, but you’re really engorging the people who have the assets and owe the debt. And, honestly, those people don’t need more money — it just appears that they are going to get it through expedient political means like this where money is created without taxation and given away like it actually was a store of value.
With policies like this, money is not a store of value, but melting ice cream cone meant to be consumed quickly before it is worthless.
With apologies, this is a woefully simplistic comment, starting with this: “If you print money to pay for things, that will generate inflation.”
As I’m sure you’re aware, that has not proven true over the past dozen years, and longer than that in Japan.
With all due respect, you’re just parroting the first three chapters of an undergraduate economics textbook.
Remember this letter? … https://blogs.wsj.com/economics/2010/11/15/open-letter-to-ben-bernanke/
The part about “distort[ing] financial markets and greatly complicat[ing] future Fed efforts to normalize monetary policy” turned out right, but the rest is now enshrined in history as so hilariously wrong as to cast considerable doubt on the intelligence of the people who wrote it.
Everyone who signed that letter should never have been taken as an economist again. They weren’t just wrong. They were “sun is at the center of the universe” wrong. And just as importantly it was cruel.
A BAD undergraduate economics text, at that.
With unemployment at extreme levels, eating ice cream quickly and in mass quantities is exactly the point.
I’ve been hearing this same story for 40 years since the problematic inflation of the early 1980s. If a deficit of over a 1 trillion dollars and a debt of nearly 30 trillion isn’t moving the inflation needle, it might be time to check your assumptions regarding money printing.
What irks me is the people that shout deficit and inflation when money is printed to help people. But if they want more military hardware, a bailout for banksters or a twenty year war; “deficits don’t matter” as Mr. Cheney said and as the Republicult has demonstrated repeatedly over the course my lifetime.
Not funny how that stuff works. The republic has some rot. If DC doesn’t start thinking instead of the lunatic game they play, this country will change in a way no one will like.
Apparently you missed the bit where inflation is good for debtors, and not so good for lenders. I’ll let you figure out what proportion each of those groups represents in the US population.
If you print too much money you have to get inflation. The question is how much is too much. If the money is used for rent, food, gas and other necessities then that shouldn’t affect inflation. I am totally for the the stimulus (and other infrastructure projects) but given the last few days i am a little concerned.
“If you print too much money you have to get inflation”
No, you don’t.
You probably will. But you might not.
We have to (have to) stop speaking about the economy, money, companies, stocks, bonds, etc., as though they’re subject to immutable laws.
They aren’t.
Saying “If you print too much money you have to get inflation” is NOT the same as saying “If you jump out the window, you’ll hit the ground eventually”
“If you print too much money you have to get inflation.”
What is “too much?” The US government has over a trillion dollar deficit and close to 30 trillion in debt. Where’s the inflation?
The hard money folks have been spectacularly wrong and continue to be so. It’s clear that the US government’s capacity to print money without causing inflation has been woefully underestimated. How much so? I don’t know. But it’s to the point where, in a sane society, the US should print money until inflation actually shows up as more than a blip around 2%.
Matters more where the liquidity flows… Less on ‘too much’ and ‘what is too much’.
Where’s the inflation? We’re not seeing it in wages, but we are seeing it in commodities and food costs, housing, healthcare, education, clothing , and of course asset prices. There’s plenty of inflation around.
Great piece, H. Got to see a bit more of you. Also liked your comments about AOC earlier today. I don’t like her very much — probably because of my age — but her recent comments have been more reasonable a she seems to be acquiring some polish and even a bit of wisdom recently. As to economists; I say a again they should have term limits.
I don’t get the minimum wage debate. There are studies on both sides of the issue–it kills jobs or it has no material impact. Democrats believe that latter, and if that is the case why not $50/hour?
You’re posing a straw man.
Of course it has an impact at some point. But not at $15.
If all you intend to do is trot out straw men and erect windmills to tilt at, I’m not sure there’s much point in your debating the issue.
Your question is conceptually similar to sarcastically asking this: “Well, since we can apparently send a total of $3,200 to individuals over the course of a year in direct aid, why not send them all $3.2 million in free money?”
I’d respectfully ask that if you aren’t going to seriously engage in the conversation that you refrain from engaging.
Rolling out straw men arguments in comment threads isn’t constructive and is conducive to needlessly contentious exchanges.
One of the obvious problems is how we measure inflation is completely flawed. My costs of living have far exceeded official inflation (CPI) over the past few years. This metric is so important in our lives but yet, by simplifying it we have allowed for it to be abused.
Thanks for another brilliant piece, H.
Sometimes you blow me away.
I wish more people with a big voice would see things this way. Sometimes when you stop to think about the lack of weight that facts, science and rational thinking have, it helps to stave off insanity to at least entertain the idea that you could be dreaming.
One problem with inflation, for those of us who are pensioners, is that the government’s skewed claimed rate of inflation isn’t accurate for those who receive, and depend on, an inflation adjusted raise in income to maintain their status of living.
Wow, great piece. Funny, I’m 71, but I love AOC. She is the only glimmer of hope that I see and the GOP sees it too. Righties down the line went after her on day one and she only grows.